Japan is back from a week-long holiday! Which catalysts should you watch out for? Here’s a short list.
The central bank cares about consumer prices, so this week’s batch of consumer-related reports should get some attention.
Household confidence (May 9, 6:00 am GMT), for example, could remain at its 40.5 reading in April. Meanwhile, annual cash earnings (May 10, 12:30 am GMT) are expected to see another 0.5% decrease on top of February’s 0.7% decline and annual household spending could slow down from 1.7% to 1.6%.
Japan’s data releases don’t usually affect yen’s price action for long, but we could see a wiggle or two of any of these scheduled reports show significant surprises.
Over the next couple of days, we’ll get snippets of what the Bank of Japan (BOJ) thinks about the economy and what its future plans may be.
The meeting minutes (May 8, 12:50 am GMT) could tell us more about the members’ decision to keep their rates low for at least another year.
Meanwhile, the Summary of Opinions (May 10, 12:50 pm GMT) could reveal how some members feel about using a combo of easing tools to achieve the central bank’s 2.0% inflation goal.
Recall that the BOJ’s statement had energized neither the bulls nor bears during the event. Do you think details would help induce volatility for the yen?
Market risk sentiment
As you’ve seen in the weekly recap, it was countercurrency price movements and overall risk appetite that kept the yen’s volatility alive during Japan’s Golden Week celebrations.
We could see more of them non-Japanese catalysts move the yen this week as central banks like the RBA, RBNZ, and a bunch of FOMC members take center stage. Top-tier reports such as U.K.’s GDP, Canada’s labor market data, euro zone’s PMIs, and Uncle Sam’s inflation numbers could also affect risk sentiment.
And then there’s the U.S.-China trade negotiations. Recall that a few market players had expected the two largest economies to reach a trade deal by this week. But that was last week.
A few hours ago, Trump re-escalated trade tensions by threatening to increase the 10% tariffs on $200B worth of Chinese goods to 25% and promised that another $325B worth of goods will see tariffs “shortly.”
….of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!
— Donald J. Trump (@realDonaldTrump) May 5, 2019
For now, WSJ is reporting that China is considering canceling trade talks that are scheduled to resume in Washington on Wednesday. On the other hand, some speculate that we COULD see a deal by Friday, and that Trump made his threats to make it appear as if his tweets speeded up the process.
Watch the newswires closely for developments that might affect demand for low-yielding currencies like the yen!
Missed last week’s price action? Read JPY’s price recap for April 29 – May 3!